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Schneider-Aveva deal creates ‘a global leader in software’

20 July, 2015

Schneider Electric has announced plans to perform a reverse takeover of the UK-based industrial software developer Aveva that will combine their software operations to create “a global leader in industrial software”. Schneider is paying £550m ($855m) towards the issue of new shares in Aveva, giving it a majority stake in the business.

The enlarged Aveva will have combined revenues of around £534m ($831m) and an adjusted Ebita of around £130m ($202m). It is expected that the group will continue to trade on the London Stock Exchange.

As part of the transaction, Schneider is contributing some of its industrial software assets to Aveva and will make a cash payment of £550m to Aveva, which will be distributed to Aveva shareholders in exchange for new Aveva shares, giving Schneider a 53.5% stake in the enlarged Aveva group.

Based on the current Aveva share price, around 74 million Aveva shares will be issued to Schneider with a market value of about £1.3bn ($2bn).

The integrated software offering will include Schneider’s SimSci, Wonderware and Avantis products, along with Aveva’s PDMS, Everything3D and Aveva Net products. Schneider says the combined business will cover all aspects of digital asset lifecycle management, offering process simulation, 3D design, asset data management, operations management, and asset performance management for large, complex industrial engineering projects.

The deal will diversify and enlarge Aveva’s end-markets, enhancing its position in the oil and gas, power and marine sectors, while adding other sectors including chemicals, food and beverage, mining, water and wastewater, and pharmaceuticals. At present, the oil and gas sector accounts for about 45% of Aveva’s business.

Schneider says that Aveva will also benefit from Schneider Software’s strength in the Americas. This market will account for about 36% of the revenues of the enlarged Aveva group, compared to 18% of Aveva’s revenues today.

Schneider expects the proposed transaction to:

• result in a “unique portfolio of asset management solutions” with both the scale and a distinct market position to address critical customer requirements along the full asset lifecycle in key industrial and infrastructure markets;

Schneider Electric CEO, Jean-Pascal Tricoire: a unique portfolio

•  unlock additional value in the enlarged business with potential for material revenue and costs synergies, taking advantage of complementary end-markets, customer bases and product portfolios;

•  establish a “best in class” management team and an enhanced brand profile for attracting further talent; and

•  realise the full value of the combined software assets.

According to Aveva CEO, Richard Longdon, “the transaction will be transformational to Aveva, creating a global leader in industrial software which will be able to compete better on a global scale. Through the acquisition of Schneider Software, Aveva will significantly expand its scale and product portfolio, diversify its end-user markets, and increase its geographic exposure to the US market, in line with our strategic goals.”

Schneider Electric’s chairman and CEO Jean-Pascal Tricoire adds that the combination “will create a global leader in industrial software, with a unique portfolio of asset management solutions from design-and-build to operations… It will also create the right environment for the software teams to develop aggressively their business, while benefitting from the multiple commercial access of Schneider around the world.”

Schneider Electric employs 170,000 worldwide and achieved revenues of €25bn in 2014.

Aveva has more than 1,200 employees and has revenues worth more than $330m. Its technology was originally developed and spun out of Cambridge University in 1967. In 1976, Aveva introduced the world’s first 3D plant design system (PDMS) with an object-based engineering database. Over the past five years, Aveva has invested close to £150m in research and development.

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